Aromatics players react to INEOS Styrenics' closure of SM, PS units

20 March 2012 12:50[Source: ICIS news]

LONDON (ICIS)--European aromatics players reacted on Tuesday to the announcement that INEOS Styrenics will close its polystyrene (PS) and styrene monomer (SM) units at Marl in Germany at the end of the year with a mixture of resignation and anxiety.

Following the news that Germany-headquartered major Styrolution will no longer take SM and PS from its joint-venture plants in Marl, partner INEOS Styrenics announced on 20 March that it will close its PS and SM units at its Marl facility at the end of 2012.

“It is with great regret that I have to announce the closure of the polystyrene and styrene monomer units at Marl, but I am pleased to confirm that all staff affected by this decision will be offered alternative roles within INEOS Group or Styrolution,” said Gerd Franken, CEO of INEOS Styrenics.

Styrolution was created in October 2011 by the merger of some of the styrenics operations of Germany’s BASF and Switzerland-headquartered INEOS.

The PS plant has an annual capacity of 180,000 tonnes/year, while the SM plant can produce 350,000 tonnes/year.

The European styrenics sector has faced the challenge of volume loss in key end-use markets, as well as pressure from newer supply sources in the Middle East and Asia for several years, even before the 2008 downturn.

Following the emergence of several joint ventures in Europe, plant closures and operational streamlining had been predicted by some sources, as companies strive to remain competitive and efficient.

There has already been strong reaction to the news among players in the European styrene market, who are now considering the potential effect of the closure.

“It’s certainly going to make the market a bit livelier,” said one trader.

“With the additional PS capacities in the Middle East now, this will make it very tough for European players,” another source said.

Others remain unsure of how this will affect supply-demand balances, as the missing 350,000 tonnes of the monomer is somewhat counterbalanced by the removal of the PS unit.

Additionally, these are nameplate capacities. It is estimated that these units have generally been running at an average output of 75%, which would mean that the volume of SM actually being taken out of the market by 2013 would be much lower than 350,000 tonnes.

One trader estimated it would be closer to 150,000 annually. “One or two imports from the US each month would cover the shortfall,” it said.

Sources agree that the European market has had to manage extra capacity for some time, so news of the plant closure at Marl did not come as a surprise for many.

“Location-wise, the Marl site is not great and with the structurally high cost of ethylene and benzene, running these EB [ethylbenzene]/SM units is difficult financially,” said an aromatics trader, estimating that an EB/SM unit would be running at a loss for nine months of the year.

There was even speculation that further streamlining within the European styrenics market could be on the horizon.

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